Strong demand for electric vehicles and batteries drives China's export growth: supply chain reshaping from an industrial perspective

Strong Demand for EVs and Batteries Drives China's Export Growth: Supply Chain Reshaping from an Industry Perspective

The driving force behind China's exports is undergoing a profound transformation. Aditi Rasquinha, CEO of DHL Global Forwarding Greater China, explicitly stated in a CNBC program that the strong demand for electric vehicles and batteries is the core driver of China's current export growth. Behind this assessment lies a microcosm of China's manufacturing shift from traditional labor-intensive products to high-value-added, high-tech industries, as well as a reflection of the global supply chain's reconfiguration under geopolitical pressure.

New Energy Vehicle Industry Chain: A New Engine for Exports

China's full-chain advantages in the new energy vehicle sector—from battery raw materials and cell manufacturing to complete vehicle production—are being transformed into export competitiveness. In 2025, China's new energy vehicle exports have exceeded 2 million units, and battery exports have surpassed $40 billion. This growth is no accident: Chinese companies dominate lithium iron phosphate (LFP) battery technology, enjoy significant cost advantages, and lead globally in production capacity. At the same time, intense competition in the domestic market is forcing companies to accelerate overseas market expansion.

The "strong demand" mentioned by Rasquinha mainly comes from the European and Southeast Asian markets. Although the EU has launched anti-subsidy investigations into Chinese EVs, actual imports are still rising because Chinese-made EVs are competitive in terms of cost-effectiveness, range, and intelligence. Southeast Asia, due to its accelerated local electrification transition, has become an important export destination for China's new energy vehicles and batteries.

Supply Chain Restructuring: From "China+1" to "China+N"

Geopolitical tensions are reshaping global trade routes. Rasquinha specifically noted the impact of the Middle East situation on the supply chain. The Red Sea crisis and shipping detours around the Cape of Good Hope have led to higher transportation costs and longer transit times, prompting multinational corporations to accelerate the implementation of "China+1" or even "China+N" strategies—that is, while maintaining core production capacity in China, establishing alternative supply chains in Vietnam, India, Mexico, and other places.

However, China's deep integration advantages in the new energy industry chain are difficult to replace in the short term. For example, the processing links for materials such as lithium, cobalt, and nickel required for battery manufacturing are highly concentrated in China, and Chinese companies have already deployed mineral resources overseas (such as lithium mines in Chile, nickel smelting in Indonesia), forming a closed loop from resources to manufacturing. This embedded supply chain structure means that even if geopolitics drives some production capacity to relocate, China will remain a key node in the global new energy supply chain.

A Double-Edged Sword of Industrial UpgradingThe shift in export structure toward electric vehicles and batteries has increased the added value of Chinese manufacturing but also introduced new risks. First, these industries are highly sensitive to policy: the EU's Carbon Border Adjustment Mechanism (CBAM) and the localization requirements of the U.S. Inflation Reduction Act (IRA) could weaken the price competitiveness of Chinese products. Second, the global growth rate of EV penetration may slow, leading to demand fluctuations. Moreover, rising trade protectionism—such as the U.S. imposing 100% tariffs on Chinese EVs—is forcing Chinese companies to build overseas factories (e.g., BYD building plants in Thailand and Hungary), which presents both opportunities and challenges.

From an industry competition perspective, China's leading position in the battery sector is facing pursuit from South Korean (LG, Samsung SDI) and Japanese (Panasonic) companies, and competition in next-generation technologies such as solid-state batteries is intense. Chinese companies must maintain cost advantages while increasing R&D investment to sustain their generational lead.

Long-term trend: A new paradigm for Chinese exports

Rasquinha's observation reveals a broader picture: China's exports have shifted from a "world factory" model to "green technology output." Electric vehicles and batteries are not just products; they are vehicles for the internationalization of Chinese industrial standards (such as charging interfaces GB/T and battery specifications). In the future, with the coordinated development of green industry chains like energy storage and photovoltaics, Chinese exports will rely more heavily on energy transition-related products.

However, the trend of global supply chain fragmentation is irreversible. Chinese companies need to transform from mere exporters to global industry integrators: establishing localized production capacity overseas while maintaining core R&D and high-end manufacturing capabilities at home. This "dual circulation" model, both domestic and international, will be key to addressing geopolitical risks and consolidating industrial advantages.

In summary, China's export growth driven by electric vehicles and batteries marks a new phase in its manufacturing sector. Its impact goes beyond trade figures, redefining the rules and landscape of the global green supply chain.